March 28, 2012

Mario Monti's Big Challenge

Mario Monti (Reuters)

To boost growth and overcome its protracted debt crisis, the eurozone needs to undertake “ambitious structural reforms” aimed to reduce restrictions on labor mobility, ease job protection and change the wage bargaining system, says the OECD in a report released today. In Italy, the call for further reforms comes as a big help to Mario Monti in the wake of opinion polls showing a steady decline in support for the Italian prime minister—an ISPO poll for Sunday’s Corriere della Sera showed support down to 44 per cent, from 62 per cent in early March—who is spearheading a spate of labor reforms. More explicitly, OECD Secretary General Angel Gurria said that the reforms which the current Italian government has undertaken represent a major and consistent step towards finding a solution to the country’s most pressing labor market issues.

A well deserved support for Monti as well as for those who, in turn, support his efforts for a major overhaul of Italian labor laws (including the totemic Article 18 of the 1970 Workers’ Statute), namely the measures that were hashed out during a marathon meeting one week ago among ministers, labor unions and business leaders, and aimed to usher millions of young people into the job market and help the country’s struggling companies manage economic downturns by cutting jobs, but also create a wider safety net for the jobless.

The problem is that “unfortunately” (the inverted commas are necessary here, of course) the measures still need to be presented and approved by Parliament. In fact the center-left Democratic Party, which is one of the three parties of the “great coalition” supporting the government, has an understandable but irrational reluctance to vote the “unacceptable” bill—even in the light of the fact that Italy’s largest labor union, the CGIL, didn’t sign off on a key part of the overhaul and announced 16 hours of stoppages including a day-long general strike to fight the reforms. “If Parliament backs us, we will be able to say that Italy'’ labor market has modernized, and that there are no more hurdles to foreign investment,” Monti said during a news conference before heading to Asia, where he is now spending a few days to persuade foreign investors to put their money into Italy...

Well aware of the risks his government is running, Mario Monti said on Monday in another press conference (in Seoul, Corea) he would not cling to power if unions and politicians rejected his economic reform plans, putting pressure back on to opponents of the bill. “The objective is a lot more ambitious than just staying there. It’s trying to do a good job,” he said. “If the country, through its labor organizations and political parties, does not feel ready for what we consider a good job, we would certainly not seek to keep going just to reach a particular date.”

Strong, courageous words, and a big challenge, without a doubt. After all, as the WSJ rightly reminds, standing up to Italy’s labor unions takes courage, and not only of the political sort. Furthermore, since coming to power in November, Monti has passed some measures by emergency decree, bypassing parliament, but last Friday he announced that the bill would be voted upon in the parliament in the normal way. Another act of courage, says the WSJ—but, to be honest, it was President Napolitano’s credit (or fault, depending on the points of view...). However, as far as one can reasonably expect, the bill will be approved by the parliament, and this for the simple reason that no one wants the government to shut down.

Be it as it may, the WSJ piece is worth reading and remembering. Here are some excerpts from it:

Italian Prime Minister Mario Monti has walked away from negotiations with Italy's labor unions and announced that he is going to move ahead with reforming the country's notorious employment laws—with or without union consent. If Rome is spared the fate that recently befell Athens, mark this as the week the turnaround began.
[…]
Mr. Monti has three chief advantages over his recent predecessors. He remains popular in Italy. He also says he doesn't intend to run for re-election. This gives him a chance to maintain control over his reforms as they move toward a parliamentary vote.

More importantly, Mr. Monti—a former economics professor—has a rare opportunity to educate Italians on the consequences of opposing reform. This won't require sophisticated explanations of why employers will still employ people even when the law does not force them to do so. He can merely ask Italians to look across the Ionian Sea. If that doesn't scare them sober, then nothing will help.

Postwar Italian politics has chewed up more than a few would-be reformers while career politicians and union leaders enjoy the spoils of power. The difference with Mr. Monti is that he didn't take this job to be a caretaker PM. If he means to make his current reform the first, not last, step in a more ambitious agenda for reviving Italian growth, he could make his one term in office a great one.

UPDATE March 28, 2012 - 9:45 am
Mario Monti, addressing the Forum organized by the Nikkei Shimbun editorial group in Tokyo to explain Italy’s political, economic and institutional situation: “It’s a reform that causes resentments and some sharp discussions in Italy. But I believe that the majority of Italians believes it is a needed step, in the workers’ interest.” “This Government has a wide consensus in the polls while the parties do not.” (AGI)

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The name of this blog indicates a place where people seek their bearings, but this is not a site where they can actually find them—everyone is, or should be, his own wind rose.
Previous incarnations of this blog: here and here.

About Me
I have been a High School teacher of History and Italian almost all my working life. Now that I am retired, I can finally spend more time doing what I love most: writing.
In my Twitter profile I describe myself as “European by birth, American by philosophy,” which after all is quite an accurate description. Perhaps it also supports the adage that brevity is the soul of wit.
I live in the Venice area with my wife, my daughter, and my dog, a Golden Retriever that swims like a fish and is crazy about tennis balls.
I am currently a contributor/columnist at Atlantico.
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«Proclaim LIBERTY throughout all the Land unto all the Inhabitants thereof Lev. XXV, X
By Order of the Assembly of the Province of Pensylvania for the State House in Philada»
1752

«If I had a bell
I'd ring it in the morning
I'd ring it in the evening ...
all over this land,
I'd ring out danger
I'd ring out a warning
I'd ring out love between all of my brothers and my sisters
All over this land.
...
It's a bell of freedom»Lee Hays and Pete Seeger
["If I Had a Hammer"]

"Friends, Romans, countrymen, lend me your ears;
I come to bury Caesar, not to praise him.
The evil that men do lives after them;
The good is oft interred with their bones;
So let it be with Caesar. The noble Brutus
Hath told you Caesar was ambitious:
If it were so, it was a grievous fault,
And grievously hath Caesar answer'd it.
Here, under leave of Brutus and the rest--
For Brutus is an honourable man;
So are they all, all honourable men--
Come I to speak in Caesar's funeral.
He was my friend, faithful and just to me:
But Brutus says he was ambitious;
And Brutus is an honourable man.
He hath brought many captives home to Rome
Whose ransoms did the general coffers fill:
Did this in Caesar seem ambitious?
When that the poor have cried, Caesar hath wept:
Ambition should be made of sterner stuff:
Yet Brutus says he was ambitious;
And Brutus is an honourable man.
You all did see that on the Lupercal
I thrice presented him a kingly crown,
Which he did thrice refuse: was this ambition?
Yet Brutus says he was ambitious;
And, sure, he is an honourable man.
I speak not to disprove what Brutus spoke,
But here I am to speak what I do know.
You all did love him once, not without cause:
What cause withholds you then, to mourn for him?
O judgment! thou art fled to brutish beasts,
And men have lost their reason. Bear with me;
My heart is in the coffin there with Caesar,
And I must pause till it come back to me. (...)"